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Identifying The Risks Of “Double Dipping” EI And LTD Benefits

Employment Insurance is a complex forum that many people in today’s workforce have dealt with in some capacity. While it would certainly be ideal never to encounter a situation in which you are forced to rely on employment insurance, the reality is that many workers have found themselves in that exact situation. This reality has also become much more widespread following the COVID-19 pandemic.

Understanding The Basics About EI 

Canada’s Employment Insurance program is a form of social assistance that provides temporary income support for unemployed workers.  In addition to workers in between jobs and looking for employment, the EI program provides benefits to people who cannot work due to illness, pregnancy, caring for a new child, or a seriously ill and injured person. To be eligible for EI, workers must have contributed to EI through previous employment and worked the required number of hours to qualify for regular benefits. Additional eligibility criteria relate to reasons for unemployment and willingness and capability to work again.

The Recent Changes Made to Sickness Benefits

In December 2022, the Canadian government announced an update to the Sickness Benefits portion of the nation’s Employment Insurance program. Workers will be granted a permanent extension of sickness benefits from 15 to 26 weeks. This change will give Canadians more time and flexibility to adequately recover from illnesses and injuries that impede their ability to work. Workers who receive EI sick benefits are paid 55% of their average weekly earnings, up to a maximum of $650 a week (2023) for the benefit period. In their announcement, the government stressed that “EI sickness benefits are designed as a short-term income replacement measure,” which should complement a range of other supports available to workers for longer-term illnesses and disabilities. Benefits offered through private and employer insurance comprise one such support measure.

Why “Double Dipping” on Benefits Will Be An Issue 

While extending sickness benefits to 26 weeks is something everyone can agree is a positive move, it also potentially creates a tricky conundrum for some workers who receive long and/or short-term disability benefits through private or employer insurance plans. As a result of the extension, these workers are at risk of unintentionally “double dipping” if their EI sickness benefits and private/employer benefits periods overlap. In these situations, a worker would receive income assistance from two separate sources, simultaneously and essentially committing fraud.

The Onus Is On You to Know Your Dates

Although it’s not fair to say that the EI extension to 26 weeks comes with strings attached, it is true that workers need to do their homework to protect themselves from getting caught in a sticky situation. Employees should make it their business to know their workplace benefits landscape – specifically, whether they have access to a combination of long and/or short-term disability benefits or none. At this starting point, employees can assess what, if any, action they need to take to avoid being overpaid.

Get Ahead to Protect Yourself 

The news of the EI extension is still quite recent, which naturally means that there is a good chance some employers and employees are not aware of the changes or possible implications.

For this reason, communication between employers and employees is key to ensuring that everyone acts within the appropriate parameters while maximizing the available benefits. Employees are obliged to notify the government of any disability benefits they are expecting to avoid potential EI overpayments. In the event of an overpayment, the employee will be indebted to the government and may be required to refund EI benefits.

Employers Must Also Communicate Coverage Details

Similarly, employers must communicate coverage details (duration, start, and stoppage times) to employees to prevent potential EI overpayments. Since the EI extension is most beneficial to workers without disability benefits, employees with disability coverage must act strategically to reap the most beneficial outcome. Employers can help by painting the bigger picture for their employees. It would be more favorable for employees to opt into their long or short-term disability benefits at their earliest opportunity to take advantage of the higher weekly payments and other resources available through their plans. With higher payments and more robust support measures provided by their disability plan, employees will likely require less time on disability and be better positioned to return to work. 

Since the government has not imposed a legislative requirement for employers to change their current disability and sickness benefits plans, the onus is placed on individuals to make themselves aware of the details associated with their particular circumstances. This way, workers are better situated to maintain maximum benefits coverage while steering clear of any unintentional wrongdoing.

Check out our blogs on Short-Term Disability and EI Reform for more information on this evolving topic.